YouSaid · the spoken record

Graeme Forster

lines on the record: 102
first: 2023-10-13
most recent: 2023-10-13
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“Exactly right. So I think I would just say, look, you know, make the best decision you can at the time with all the information you have and have no regrets.”
2023-10-13 · Masters in Business · Graeme Forster on Global Longevity Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“And the little things that went right there that led them on this path to your parallel universe point. I struggle with this again. I think maybe this is a cop out. I wouldn't tell myself, you know, if I was at a time machine, I would tell myself absolutely nothing. And I think the values in the struggle, basically. You internalize lessons if you learn them yourself. Even if it's you.”
2023-10-13 · Masters in Business · Graeme Forster on Global Longevity Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“I found this I find all your questions hard, but this one I found hard as well in the sense that the more I have interact with people I work with and other people, the more you recognize that everyone is so different. Everyone has such different characters, such different traits, and advice to one person is completely useless when applied to another person. You have to tailor it so much. So the one thing I came up with, which I think is universal, Is not things like folly of passion, which is powerful for some, but not others, it's act with integrity. It's that old adage of trust is hard earned but easily lost. And if you act with integrity through your career, through your life, interacting with everybody around you. Then I think you can't go far wrong.”
2023-10-13 · Masters in Business · Graeme Forster on Global Longevity Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes, I mean, that is exactly aligned with how I think everybody should think about investing and poker. It's all about thinking about the process rather than the outcome. And that's what poker teaches you. Because it drums that into you over and over and over and over again that it's the process, not the outcome. Because the outcome is so different. The outcome is.”
2023-10-13 · Masters in Business · Graeme Forster on Global Longevity Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“Peter Benstein, yeah, against the gods and power of gold and all those good ones. Taleb was one I picked up earlier, which is understanding the role of chance in life. Alchemy of Finance by George Soros, all the classics, Jim Rogers books, and then fun business books like Rogue Trader is such a good book written by Nick Leeson. Brought down bearings bank. Fascinating story of how you can slip into. Those types of situations, right? Not starting out as somebody who in any way wants to cause harm or a bad person, you just end up taking a little bit too much risk and then you step into some gray area and then you step a little bit further to try to get that loss back and it snowballs. Fascinating story. That's Root. And then there's a whole bunch of stuff like bad blood and all those sort of those.”
2023-10-13 · Masters in Business · Graeme Forster on Global Longevity Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“I struggle with this one. For knowledge, my philosophy has always been to go to people who really know about the specific thing you want to understand better. That's papers and it's books, and it's just finding experts. But I think the key, so I had to look up what is What is a mentor? I think the key thing there is trusted. It's trusted counselor that you go to because you know they have your best interests at heart. And that for me is very much close friends family as my brother. It's my close colleagues, it's the Grey family and Orbitz, Adam Carr, et cetera. People who you know have your back, basically.”
2023-10-13 · Masters in Business · Graeme Forster on Global Longevity Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“Sounds good. That does sound good. And Red Dwarf was the other. Red Dwarf is very, very old. British sci fi comedy. It's been one of my favourites. If you watch it for the first time, you'll think, wow, this is dated. Because when you see the spaceships, you can see the string attached to it. But the one liners are just great. There's a lot of.”
2023-10-13 · Masters in Business · Graeme Forster on Global Longevity Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“IT crowd. It's about an IT department in the basement of a business in some London suburb. You have to be very geeky to enjoy that one.”
2023-10-13 · Masters in Business · Graeme Forster on Global Longevity Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes, really great comedian, really great writer. Another one, IT crowd. Have you ever heard of that? Now, this is a proper geeky comedy.”
2023-10-13 · Masters in Business · Graeme Forster on Global Longevity Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, it's fun, it's very well written. It's a little bit of music, great script. Ted Lasso, we enjoyed succession, you know, all the big ones. The ones that I think maybe you wouldn't have heard of, because I'm British and I like these sort of niche comedy. Series Afterlife with Ricky Gervais.”
2023-10-13 · Masters in Business · Graeme Forster on Global Longevity Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“Financial hub and extremely convenient. So where do you get to combine those two things? Convenient in the sense that what are the frictions in Bermuda? Very little. You can live right next to the office. Right next to the dentist, right next to anything you need to do is right there. There's very little friction in your life. If you live in Berm But if you want that, typically you can't combine that with international business of the highest quality. And Bermuda is one of the few places.”
2023-10-13 · Masters in Business · Graeme Forster on Global Longevity Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“The outlook looks very nice because we've got this lovely view from the B. The decision to set up in Bermuda was the founder's original decision based not on TAC. Everyone assumes tax. It's based on the fact that it was well developed. Big financial”
2023-10-13 · Masters in Business · Graeme Forster on Global Longevity Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“Nobody wants to invest in Indonesia, which is great on two sides. You get cheap valuation, but you also get the businesses that are in Indonesia and dominant, they don't have any capital to compete with. So their growth rate on a per share basis is actually higher than it was when everyone was excited 20 years ago. So I think that there are really good opportunities. Brazil is another example in emerging markets. You're seeing cheap assets and reasonably good backdrop.”
2023-10-13 · Masters in Business · Graeme Forster on Global Longevity Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“Ukraine became a pariah. So the story around emerging markets in 2005 was absolutely right. You had growth rate in population. That's come true. You had productivity growth that's come true. What hasn't come true, investment returns. Why has that not come true? Because everybody wanted a piece of them. Everybody wanted a piece of them. So whilst the earnings growth has been good for the economy overall, the per share earnings growth has been absolutely awful because the number of shares has gone up and up and up. Issued capital for all this capital coming in. What have you got today? You've got apathy.”
2023-10-13 · Masters in Business · Graeme Forster on Global Longevity Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“Since then. They haven't, in terms of their stock market and in terms of their economies, their economies have grown reasonably well. Russia aside. South Africa is in there as well”
2023-10-13 · Masters in Business · Graeme Forster on Global Longevity Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“Lots and lots of people, you pay five, six times earnings for some of these businesses, you're getting sort of 10, 11% dividend yields out with sort of low teen growth rates. If you go back to 2005 when I joined Orbis, the BRICS was all the rage, right? BRICS, bricks, bricks, that was the AI of the time. Bricks.”
2023-10-13 · Masters in Business · Graeme Forster on Global Longevity Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“India is a really interesting area in terms of the geopolitics, in terms of the population story, in terms of the per capita wealth growth potential, but it's also a pricey market. There's businesses are not priced cheaply. And so you pay up for the promise, and that makes it less interesting in my mind. Whereas if you go to an Indonesia, Is similarly low per capita wealth, similar growth rate, similar productivity growth.”
2023-10-13 · Masters in Business · Graeme Forster on Global Longevity Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“I agree. You have to be very, very careful. If you're looking broadly at emerging markets, Korea is very interesting. Obviously, he sits right next to China. But if you look at Korea historically, they've often been a Japan fast follower. Think about the export markets that Japan built in the 60s and the 70s, autos, electronics, Korea really just followed that model and did it wonderfully well. So, the noises we're getting out of Korea are very similar to the noises we've been hearing out of Japan over the last five to six years, corporate governance reform, balance sheet efficiency, capital allocation, all the things that put this big discount on Korea and put the big discount on Japan prior to the last few years. And so, careers, I think Japan a few years ago, and you've got more upside there.”
2023-10-13 · Masters in Business · Graeme Forster on Global Longevity Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“That's how you have to think. And so when I think about it in those terms, it's okay, you need to be aligned with the overall system. And that's the problem you have when investing in China is it's just that there's a lot of uncertainty around, as we know, the geopolitics and the friction in terms of the different ideologies.”
2023-10-13 · Masters in Business · Graeme Forster on Global Longevity Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“China's investible, I think. And it's a question of risk premium. What risk premium do you get for investing in China? The big issue you have is think about Alibaba today. It's come down a long way. It's quite interesting. Looks very cheap on a standalone basis if it traded in the US. I think everyone would be all over it at this valuation The problem is, you know, if you think about, if you had a spare 200 billion lying around, would you go and spend that on... Buying the business outright as a long term investment, buying Ali Baba for the next thirty years. And as a long-term investor, you have to think that way, because you're buying a piece of a business.”
2023-10-13 · Masters in Business · Graeme Forster on Global Longevity Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“Exactly. That is phenomenal, right? So why, you know, that's where it comes back to AI. Do you need to make a decision on NVIDIA's future here at this valuation? Or can you go out there and find these types of opportunities? So the risk, of course, is the magnificent seven keep rising and the market does 20 and you're doing 13. But a 13 It's a great return.”
2023-10-13 · Masters in Business · Graeme Forster on Global Longevity Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“That 7% has come from growth and yield. A little bit of yield, a little bit of growth, that's where your return comes from. If you can get a 13% pure cash yield with an inflation, which is inflation protected, is real. Because of the price.”
2023-10-13 · Masters in Business · Graeme Forster on Global Longevity Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“So it stands for International Petroleum Exploration or something like impact. It's been around for a long time. And they're mostly LNG, and they have these big LNG fields off the coast of Australia supplying all of Asia with liquefied natural gas. So, what's interesting there is you get that nine percent yield, but it's in yen. If you hedge to dollars, of course, because you've got that big, big interest rate spread today. That nine goes to 13. So that's cash yield, real cash yield. Now there's some nuance there in a sense that's kind of a dollar business as well. Changes in the end will impact the underlying business, but that is a good solid yield that you're getting in your hand. And what's the return of markets been over the long term? 7%.”
2023-10-13 · Masters in Business · Graeme Forster on Global Longevity Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“Currency hedge is very helpful, so we own a business called Impex, which is one of the biggest energy companies in Japan. They're now paying out much more of their earnings than they used to. So that's nice. You've got a 4% dividend yield and a 5% buyback yield. So it's a 9% total yield in yen. And they're still paying out about half the amount that a shell or a BP does.”
2023-10-13 · Masters in Business · Graeme Forster on Global Longevity Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“I think it's a decade because it takes a long time to unwind cross shareholdings. It takes a long time to move the narrative and for that to continue to go. But what we've seen is because we've been meeting with these management teams for decades now, we can kind of benchmark it. What does the change look like now versus five years ago, which is five years? Because it's been gradually improving over time. This is a step change. When we go and meet with management teams now, it's a meaningfully different conversation, it's a different tone. Now the activists are jumping in there. I don't think that's particularly helpful because it's happening by itself. And if you're coming as an activist, waving your flag, going in the newspaper, you almost sort of like you risk this delicate situation breaking what is quite a nice trend.”
2023-10-13 · Masters in Business · Graeme Forster on Global Longevity Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“Absolutely extraordinary, and some of these book values are understated. So, I mean, it's remarkable the valuation. So it's coming from the internal pressure. It's coming from the regulator. It's coming from the government. It's coming from the Stokyo Shock Exchange. And when that starts to bite for one or two companies, you start to see it proliferate because business in Japan is all about not sticking out too much. It's about consensus. It's about doing the right thing societally as well as for your business. And so once you start seeing it start to roll, then it snowballs, and I think we're just at the front end of that now.”
2023-10-13 · Masters in Business · Graeme Forster on Global Longevity Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“I think so. Yeah, you're seeing people at the Tokyo Stock Exchange have come out and told businesses that they really need to trade above book value. Why do you trade below book value? It's extraordinary. You know, you're not that implies that the market thinks you don't create...”
2023-10-13 · Masters in Business · Graeme Forster on Global Longevity Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“I don't think this is activist driven. I don't think it's a threat of activists or the presence of activists that are driving this change. I think it's very internal.”
2023-10-13 · Masters in Business · Graeme Forster on Global Longevity Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“And in terms of capital efficiency, it's horribly capital inefficient because as soon as they start selling those cross-share holdings, that money starts coming out to shareholders that gets reallocated to businesses on the basis of the growth potential. And so it's really positive for the economy to unwind all of these and to use all this idle cash. Abenomics was the start of Was what 2015 something like that almost”
2023-10-13 · Masters in Business · Graeme Forster on Global Longevity Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“We've been investing in Japan since the early 90s. We meet with management twice a year. A lot of different management teams across the economy. We talk to them. We understand them. We try to figure out, you know, try to help them with their business. We try to understand the reasons for why they're doing what they're doing. We gradually try to help them on the capital allocation side, nudge them to, okay, is it sensible to hold shares in all these other businesses? Because as an investor like us, number one, we're not just owning you, we're owning everything, it's like owning an index.”
2023-10-13 · Masters in Business · Graeme Forster on Global Longevity Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“It's very difficult to be an activist shareholder in Japan because it's a very consensus society and foreign shareholders coming in and doing the evil deeds aren't particularly welcome. What do you have to do in Japan is you have to build a relationship with management over a long period of time.”
2023-10-13 · Masters in Business · Graeme Forster on Global Longevity Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“Absolutely crazy, and it was, you know, the lower quality businesses there were the ones that were getting the most expensive. It was the one, it was a balance sheet bubble almost based on the price of land. So that was one reason why another reason is the corporate governance in Japan has been awful. Too much cash on balance sheets. Unproductive cash, too many cross shareholdings, they all hold bits of each other”
2023-10-13 · Masters in Business · Graeme Forster on Global Longevity Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“So, I mean, the reason why we're still way below that 30 year ago peak is because it was just absolutely extraordinary. There's never been a bubble like it.”
2023-10-13 · Masters in Business · Graeme Forster on Global Longevity Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“I don't think there are any big geographical inefficiencies today. Japan's very interesting because they're going through a big corporate governance change, which is getting in the news.”
2023-10-13 · Masters in Business · Graeme Forster on Global Longevity Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“And what that does is it pushes up the term premium. And as the term premium is going up, then this normalization of the relative valuation gap between the value stocks and the growth stock starts to close. And you get that at the same time as these businesses are generating very, very healthy margins as well because pricing's good. Pricing's good and they're using that free cash flow not to reinvest in the business because they're still worried about their low share prices. They're just paying it all out. So it's all going to the bottom line. It's all coming back to shareholders. That's where we're getting a lot of yield in the portfolio.”
2023-10-13 · Masters in Business · Graeme Forster on Global Longevity Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“And the reason for that is getting back to those short duration old economy businesses, the lower growth ones, the value stocks, if you like, because they've had such low valuations through this cycle. They haven't invested that drives not enough stuff into the real economy because you're not producing enough and it's not enough primary energy and et cetera, et cetera. And that drives this kind of inflation impulse through, and we saw that in the 70s and we saw that in the 2000s, the 2000s, it wasn't quite as strong because you had a big labor arbitrage with China, but the underlying inflation was reasonable.”
2023-10-13 · Masters in Business · Graeme Forster on Global Longevity Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“I would have value stocks synonymous with short duration, and I still think they look very cheap. So your value stocks are attractive and getting back to that AQR measure, the dispersions are still very wide. I think this is a cycle which is reflexive. Once you get to the top, it starts to roll.”
2023-10-13 · Masters in Business · Graeme Forster on Global Longevity Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“So that's the cycle, and that's your short term versus your long term view. On a long term view, you've got to embed the term premium into that long yield. On a short term view, if you're smart, I'm not smart enough to do this, you can sort of try to play around recessions and slowdowns and rate cuts, and you might make a bit of money on the duration end like that. But I still see that as the big dislocation within the equity market.”
2023-10-13 · Masters in Business · Graeme Forster on Global Longevity Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“This is the relative attractiveness of the shorter end, the shorter duration end of the equity space. This is more like the real economy slow growth businesses. They are on a relative basis cheap, very, very cheap versus where they had normally not cheap versus 2021. That was the most extreme point. So that leaves us sort of in a place where I think you just see this dynamic continuing to play out. I would be concerned about duration still.”
2023-10-13 · Masters in Business · Graeme Forster on Global Longevity Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“And the early 70s at the top of the nifty 50. I think so we've passed that point. So we're just in a gradual corrective process. We've seen it before. We saw it through the 70s. We saw it through the 2000s. And we're just in that moment. And if you look at that gap between the evaluations in the long and short duration end, it's closed, but it's not closed by very much. I think listen to Cliff Asnes AQR. He's saying, okay, was it the 99th percentile? No, it's at the 70th or the 85th or some such. We measure.”
2023-10-13 · Masters in Business · Graeme Forster on Global Longevity Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“And it was the opposite for the high growth businesses those very high ratings were saying, okay, go and raise more capital, your cost of capital is very low, go and grow.”
2023-10-13 · Masters in Business · Graeme Forster on Global Longevity Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“We've had all sorts of bubble to an extreme proportions, especially on the long duration end. Especially on the long duration end. So that's led to this huge dislocation within asset markets with the long duration businesses have been trading at extraordinary multiples and the short-duration businesses, which are typically the very cash flow generative low growth ones. I've been extremely depressed, and you could see that dynamic in the late 60s, you see it in the 90s, and it led to a very interesting thing, which was the companies. Whose share prices were very low stopped investing. Like the energy companies in the late 60s and the late 90s, they just stopped. They reduced CapEx enormously because the share prices were telling them, don't go out and grow. Pay out your cash flow to us because we're not giving you any kind of rating.”
2023-10-13 · Masters in Business · Graeme Forster on Global Longevity Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“You're saying the opposite. I'm saying the opposite. And the reason is because that term premium has been very negative over the last five years and still isn't positive. It's risen. From very, very negative levels, but it's still not possible. That has to be, in my opinion, positive. People disagree on this point. It has to be positive because it has to compensate you for taking time risk. That's the real time risk is the term premium. And I think it's fascinating if you go back to the 60s and you look at when it was very low. The late 60s, and you go back to the late 90s, also very low, you see exactly the same dynamic that we've seen over the last five years. That is all the long duration stuff goes up. Up in the early 70s, you had the nifty 50. Late 90s at the Tech”
2023-10-13 · Masters in Business · Graeme Forster on Global Longevity Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“You don't know what inflation is going to do. You don't know what real rates are going to do. So you need an extra bit of compensation. And that's backed out. It's like a risk premium, like an equity risk premium. You can back that out. And that term premium has been negative. Never before in history of tracking this variable has that gone negative. In the 60s, it was very low The 90s, it was very low, it's gone negative over the last five years. Absolutely incredible. And that tells you there's a huge mispricing in duration, a huge mispricing on the long end of the curve.”
2023-10-13 · Masters in Business · Graeme Forster on Global Longevity Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“100% agree, and the other element is you can, there's a specific variable you can look at. That tells you that it was a giant inefficiency, and that is the term premium. Which is now getting into the media a bit more. We see more and more about the term premium. So the term premium is embedded in the long bond. The 10 year yield of a JGB or a Treasury or a Bund. And it is the extra return you should get for taking on time risk effectively That long bond should embed the expected inflation rate, the expected path of short term real rates, and something else, and that something else should compensate you for the uncertainty in all those other variables.”
2023-10-13 · Masters in Business · Graeme Forster on Global Longevity Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“I mean, that's the key you just hit on it. It's been free capital. And so we've seen a giant capital misallocation on the basis of rates being too low, long yields being too low. And there's been a raging debate even in that period, are rates too low. Aren't we inherently deflationary environment? Right. Are we demographics and technology and et cetera, et cetera, et cetera?”
2023-10-13 · Masters in Business · Graeme Forster on Global Longevity Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“Important, you know, one of those three critical variables. The fourth one, of course, is client alpha or dollar weighted alpha. And that's alignment as well. The fees help with that.”
2023-10-13 · Masters in Business · Graeme Forster on Global Longevity Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“To facilitate its philanthropic work. So you get that nice symbiotic relationship and the incentive of the foundation is to make sure that underlying investment business is healthy and sustains over a very long periods of time. So it's very much embedded in that the trustees of the foundation that we need healthy underlying investment businesses because that's what drives the dividends that drives the philanthropic activity over time. So long-term ownership is key. The other is excess returns. I've talked about the paper portfolio system is quite unique to what we do and every analyst having that ability to express themselves from very early on in their career and learn and we can learn about them and all their foibles and all their biases over time which is quite a big deal because then you get to sort of draw out what is a person's superpower, how can they contribute in the best way to the firm, so that would be that on the return side and then on the risk side the fees really help with that as we talked about because”
2023-10-13 · Masters in Business · Graeme Forster on Global Longevity Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“Exactly, yeah, and it's mutually beneficial. One, you get that very long-term time horizon from an owner, very stable, which is essential when you're making a long-term investment decisions. Two, the foundation gets the cash flow from the business to a degree.”
2023-10-13 · Masters in Business · Graeme Forster on Global Longevity Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“Next generation, but how do they take the ownership from the founder? Do they have to borrow money to buy them out? Do they need to go public? And then that leads to other discussions. There's a lot of different ways. But very few of them are sustainable perpetual solutions because you're going to, you know, if you're selling to the next people, they have the same problem, et cetera, et cetera. So, the one thing you need to build into your organization is longevity, and so that's one thing we've done through the ownership, through the charitable foundation, which owns the business into perpetuity. Giving you that stability and enabling the business to embed that long-term philosophy”
2023-10-13 · Masters in Business · Graeme Forster on Global Longevity Investments · IDENTIFIED FROM THE TRANSCRIPT · source